Simon Horner is Director of Policy and Public Affairs at British Private Equity & Venture Capital Association [BVCA].

Owen Jones is angry about a great many things – big business, bankers, MPs, the wealthy, the media, right-wing liberal think-tanks, to name but six. He has helpfully collected this rage into one bilious tome, The Establishment. In it, he tries to prove that neo-liberalism, small-c conservative economics, Thatcher et al, are part of the haves, whose sole purpose is keep the have-nots in their penurious state. Unfortunately he is simply too angry to do it coherently and thus fails to spot a profound intellectual flaw running through the middle of his treatise. However, this flaw, as profound as it is in undermining Jones’ worldview, has equally profound implications for the state and purpose of the current Conservative Party.

His conceit is that ‘neo-liberalism = the Establishment’ when, in fact, the opposite is true. He starts in the economic malaise that was the 1970s. At no point does he concede that the political economy at play was a disaster for the UK, and the only people who were able to mitigate their own suffering were the incumbent wealthy – i.e. the Establishment he purports to despise. This was establishment economics. Big business supped with the government who supped with the trade unions. It was government by the TUC and the CBI, dictating terms, right down to prices and incomes, to the patrician governments of Heath and Wilson. Heath though did at least try, if briefly, to challenge their status with some market reforms, but these Establishment stewards resisted. Despite this disastrous governmental paradigm, Owen Jones implies that it was working, until the neo-liberal, right-wing establishment of Margaret Thatcher and her allies in the Adam Smith Institute hit back and restored order for the supposed “haves”.

Margaret Thatcher was indeed a student of Adam Smith, and Hayek and Friedman after him. But their creed is not of the Establishment, it is not of Big Business or protecting the wealthy. It is disruption by the market, freedom of choice and breaking down monopoly provision. Jones points to the City reforms, in particular the ending of exchange controls and the Big Bang liberalisation of 1986, as evidence of Thatcher supporting her friends in the financial establishment. What in fact she was doing was ending the old boys’ network and letting in anyone who could make a contribution. She let the natural flow of capital markets decide currency valuations instead of governments. Propping up the established order this was not, as many an East End barrow boy could tell you.

Similarly, Jones paints privatisation as the seizing of yet more power by the Establishment, when, in fact, the opposite is true. It is taking power from big government and trade unions and giving it to the markets and the masses through spreading share ownership. Here Jones’s confusion continues to prevail as he attempts to paint neo-liberalism and the spread of the market as the Establishment concentrating power, when it was actually being diffused. Indeed, Thatcher was famously ill at ease with Establishment Conservatives such as Harold Macmillan before her and her contemporaries Peter Walker and Jim Prior. Jones might feel more comfortable with these kinds of conservatives, probably because he thinks they are more left-wing in their economics. But what they were was uncomfortable with letting consumers and markets dictate economic terms, rather than industrial councils with big business, civil servants and union bosses. Truly this is the Establishment, and it’s ironic that it is the one model Jones alludes to supporting. The argument Jones ought to have made is the more honest and coherent one, and that is to ask: which is the better society, the one driven by markets or the one driven by the state? Is it better to have equality of opportunity, with inequality of outcome, or are more unequal societies less viable? Those are two competing models and it is always worth refreshing the arguments for both.

The issue is with where we were in the 1970s and where we are now, and that there is clear evidence that the Establishment has a malingering habit of reappearing and asserting its grip, and that Thatcher’s revolution was a mere interregnum. It is how we challenge it that is the most interesting question. Jones believes, of course, that only the state can, and that its supposed opposite, the market, is what has got us here – though he does cloak his recommendation in the language of cooperatives. The challenge for the Conservative Party is to admit that we have slipped, and demonstrate that the state has gotten stronger at the market’s expense. However, he is certainly right that despite Thatcher’s best efforts – or, for him, because of them – the Establishment is still here. From banks to energy companies to inherited wealth, the haves and have-nots culture of the Establishment is still with us. What he gets terribly wrong is that proper conservative economic policy is the cure not the cause of these ills.

If we look at the banking crisis, it should make us very uncomfortable as liberal conservatives. This was no market, this was an oligopoly with impossibly high barriers to entry and, ultimately, an utter dependency on the state. Establishment? Yes. A free market? Not at all. Similarly, energy was an example of privatisation gone badly. Consumers have been losing out continuously, unable to make choices, and governments have been footing the bill for new investment all the while. There are many people who feel very angry about this state of affairs, and why wouldn’t they? Hard-working people have lost their jobs because of the Financial Crisis and wealthy bankers have largely been insulated from it. This is the Establishment at its worst, and it begins to explain the air of disaffection that clings to our politics at present. David Marquand writes eloquently in his book The Strange Career of British Democracy, that Conservatives used to see their job as managing change as needed, to keep order, prevent revolutions and, as much as is possible, maintain the status quo. This would have worked if the Establishment hadn’t proved themselves as utterly incapable of managing economies and the affairs of nation states. The banking crisis is just the latest iteration. So, Jones is right about banks and energy companies, but he is wrong to hold free markets responsible.

The modern Conservative Party needs to establish itself as the party of the consumer, the market, the new entrant. In other words, be the party that is anti-Establishment in every way. This means challenging big businesses where they have formed monopolies; making sure that the global tax system is fit for purpose, so they pay what they owe; lowering barriers to entry across the board; bolstering competition and fostering disruption. The Labour Party want the State to do more in the economy, which is patently a terrible idea, but they will also say that Conservatives want an economy run for big business and the wealthy. Conservatives need to expose this as untruth and come out for consumers and markets. This doesn’t mean beating up big businesses; it means making sure they don’t rest on their incumbency. More controversially, it means challenging wealth and privilege. The party of consumers and markets, if it is to retain coherency, must also be a party that taxes wealth, particularly inherited wealth more, and labour less. Of course, we want to tax both less, but the reality is it is better to tax productive activity less and stagnant wealth more, if your goal is to spread prosperity. So Jones’s challenge is an exciting one, even if it is not the one he intended to throw out. Smith, Hayek, Friedman and Thatcher are, as it turns out, as anti-Establishment as they come. The banking crisis is illustrative of what the opportunity is.

Social democrats across Europe, including our own Labour Party have been scratching their heads trying to figure out why a financial crisis and subsequent recession has not lead to their political redemption. It is because people understand that the crisis had everything to do with the establishment economics of states and oligopolies, and nothing to do with markets and choice. All they know is they felt powerless, but the last thing they want to do is give yet more power to the state, being as it is in cahoots with the big banks. What might have looked like the final nail in the coffin of free markets is correctly perceived by the people as the death of Establishment economics. Now it’s time to show people and voters that they, as consumers in truly free markets, can do a much better job of directing our affairs.